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Will Cintas (CTAS) Surprise This Earnings Season? - Analyst Blog

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Cintas Corporation ( CTAS ) is scheduled to report its second-quarter 2015 results after the closing bell on Dec 18. In the last reported quarter, Cintas' earnings beat the Zacks Consensus Estimate by a couple of cents. Let's see how things are shaping up for this announcement.

Factors to Consider

Cintas aims to continually achieve revenue build-up by increasing penetration levels at existing customers and by broadening customer base to include business segments that are not historically served. Cintas recently announced the sale of its Document Storage and Imaging businesses for approximately $180 million. The company intends to offload its non-core businesses and shift focus to high growth businesses, thus restructuring its portfolio in an effective manner.

Also, a more favorable pricing scenario and cost-streamlining initiatives are expected to drive incremental margins going forward. Cintas' rental location in Fayetteville, NC, received the Carolina Star certification from the North Carolina Occupational Safety and Health Administration (OSHA) for its security commitment. These awards and recognitions raise the company's goodwill among its clients and further strengthen its leading position in the market.

Cintas approved an annual dividend of 85 cents per share, which represents a 10.4% increase over last year's annual dividend of 77 cents per share. Additionally, the company approved an additional special dividend of 85 cents per share. The company has consistently returned cash to shareholders through stable dividend payouts and share repurchases.

However, Cintas procures raw materials from a wide variety of domestic and international suppliers, making it susceptible to market risks, which are beyond its control.

U.S. and foreign trade policies, tariffs and other impositions on imported goods, trade sanctions, and limitations on the imports of certain types of goods also escalate product costs and adversely affect its operations.

Earnings Whispers

Our proven model does not conclusively show that Cintas will beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at 0.00%. This is because both the Most Accurate estimate and Zacks Consensus Estimate currently stand at 78 cents.

Zacks Rank#2 (Buy) : Cintas' Zacks Rank #2 when combined with 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat in the imminent future.

Arch Capital Group Ltd. ( ACGL ) earnings ESP of +8.16% and Zacks Rank #2.

PG&E Corporation ( PCG ) earnings ESP of +11.32 % and Zacks Rank #1

Sanderson Farms, Inc. ( SAFM ) earnings ESP of +16.87% and Zacks Rank #3

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CINTAS CORP (CTAS): Free Stock Analysis Report

PG&E CORP (PCG): Free Stock Analysis Report

SANDERSON FARMS (SAFM): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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